Residual Market News

Voluntary Rate Requirement

Since September 1, 2012, upon request by a producer, Assigned Risk Companies (ARCs) have been required to provide a voluntary rate quote on a risk assigned through the MAIP for purposes of calculating the risk's down
payment. Companies may make their voluntary rates available to producers through a direct link to the company's rating software, through a dedicated toll-free telephone quoting service or through a third-party comparative rating vendor.

For information on how to obtain a voluntary rate quote from an ARC, refer to the Going Online section of this MAIP Messenger.

Three-year Non-Renewal Procedure

If an ARC intends to non-renew an assigned policy at the end of its 3-year assignment period, the ARC is required to notify the producer of its decision at least 120 days in advance of the policy's expiration date, with
a list of policies to be non-renewed provided to the producer on or about the first business day of each month. This provision exists so that a producer is provided with sufficient lead time to seek replacement coverage for
the risk in the voluntary market.

If the producer is not able to secure voluntary coverage for the risk, the producer may submit the risk to MAIP for reassignment. As long as the policy is submitted for reassignment at least 60 days prior to the policy's
expiration date and new policy's effective date matches the expiration date of the original policy and the driver's license number on both policies are the same, the MAIP Policy Application will be able to verify that the
insured had been assigned for three consecutive years to the same ARC and no down payment will be required. The newly assigned ARC will handle the policy as a renewal and will bill the risk for 20% of the lower of the MAIP
rate or the voluntary rate for which the risk qualifies. The new ARC will also waive the pre-inspection requirement as long as the vehicle(s) to be insured under the new policy are the same vehicle(s) that were insured under the previous policy.

Once assigned to a new ARC, the producer must provide a Notice of Transfer of Insurer (2A Form) to the ARC that non-renewed the policy, identifying the newly designated ARC. A non-renewal notice does not need to be issued
by the former ARC. If the current ARC does not receive a 2A Form from the producer, indicating that no replacement coverage has been obtained for the risk, the ARC will issue a non-renewal notice, and will furnish a copy to the producer.

Note that if the producer submits the risk for reassignment less than 60 days before the expiration date of the policy, the policy will be considered a new business policy, requiring a 25% down payment based upon the quoted MAIP premium.

New Assigned Risk Company

Green Mountain Insurance Company was approved as an Assigned Risk Company effective December 2012 and has contracted with Pilgrim Insurance Company to act on its behalf as an Assigned Risk Company.

FAQs

At this time of year, MAIP support staff receives numerous motorcycle-related questions. Below are several of the most common questions:

1. Is a motorcycle applicant eligible for the MAIP even if he only holds an active motorcycle permit and not a driver’s license?

Yes. Rule 44 – Motorcycles, Motorscooters, Mopeds and Similar Motor Vehicles of CAR's Massachusetts Private
Passenger Automobile Insurance Manual indicates that the experienced operator class may only be applied if the operator of the motorcycle has been licensed to operate a motorcycle
for at least six years. However, the inexperienced operator class may be applied if the operator of the motorcycle has been licensed to operate a motorcycle for less than six years, or holds a motorcycle permit.

2. Can a motorcycle and a private passenger automobile be written on the same MAIP policy?

Yes. A motorcycle and a private passenger automobile may be written on the same policy. A separate policy is not needed. A motorcycle may also be endorsed onto a MAIP assigned policy.

3. My motorcycle just has minimum coverage and limits. Why is the premium so high?

The most common reason for a high motorcycle premium value being calculated by the MAIP Policy Application is due to the selection of an erroneous operator rate class. When rating a motorcycle, be sure to select
the applicable Motorcycle operator class from the Rate Class drop-down box on the Vehicle Page.

This is especially important for those policies rated using WinRater or another third-party comparative auto rating software and then uploaded to the MAIP Policy Application. For all Boston Software data uploaded
to the MAIP Policy Application, Rate Class initially defaults to a Rate Class 10.

Additionally, make sure that the applicable private passenger merit rating value is selected from the drop-down boxes on both the Vehicle and Coverage Pages. The determination of merit rating plan credits and
point-based surcharges for motorcycles is the same as for private passenger vehicles.

4. Are motorized scooters and motorized bicycles (including mopeds) eligible for placement through the MAIP?

If the vehicle is registered with the Massachusetts Registry of Motor Vehicles (RMV), it is eligible for placement through the MAIP.

5. What about Low Speed Vehicles? Are they eligible for placement through the MAIP?

Yes. Low Speed Vehicles are eligible for MAIP placement. When rating a Low Speed Vehicle, please be sure to select the applicable Low Speed Vehicle operator class from the Rate Class
drop-down box on the Vehicle Page. Also, make sure that the applicable private passenger merit rating value is selected from the drop-down boxes on both the Vehicle and Coverage Pages.

Going Online

Obtaining a Voluntary Rate Quote

Enter Application Data

Once you have entered the application information into the MAIP Policy Application system and it has been verified for accuracy, the application is considered complete and the system will
allow the policy to be assigned to a company. The Assign screen will display the policy premium based upon the MAIP rate and will provide you with two options for calculating the down payment.

Select Down Payment Calculation Option

Prior to policy assignment, you have the option of selecting a down payment calculation equal to 25% of the MAIP premium or 30% of either the assigned company's voluntary
rate or the MAIP rate, whichever is lower. Check the appropriate box.

Note that if you select to obtain the assigned company's voluntary rate, you will be required to collect from the insured a down payment equal to 30% of the lower of the ARC's voluntary rate or the MAIP rate.

Assign the Policy

After selecting the down payment calculation option and certifying that you are a licensed producer, click on the Assign button to assign the policy to an ARC.

Calculate the Down Payment

If you select the 25% of MAIP premium option, the total policy premium based upon the MAIP rate will be displayed and the premium deposit will be calculated as 25% of the MAIP policy premium.

If you select the voluntary/MAIP premium comparison option, the total policy premium based upon the MAIP rate and an Assignment Checklist which includes instructions relative to obtaining a voluntary rate quote from the
assigned ARC will be displayed. You will be required to obtain from the insured a down payment equal to 30% of the lower of the ARC's voluntary rate or the MAIP rate.

Common Coverage Question – Physical Damage Coverage

Q. I submitted an application rated with physical damage coverage through the MAIP Policy Application but the ARC to which the policy was assigned issued the policy without the physical damage coverage. Can the ARC do that?

A. Under certain circumstances, as outlined in Rule 27 – Coverages of CAR's Rules of Operation, and pursuant to G.L. c. 175, § 113H, an ARC may charge an
extra-risk rate for physical damage insurance, or, in the alternative, may refuse to issue collision, fire, theft or comprehensive coverage. You must inform an applicant that meets the Rule 27 criteria that although his policy may
initially be rated with physical damage coverage, the assigned company will ultimately determine whether to issue to policy with this coverage. Note that if a lien exists on the insured vehicle, requiring the insured to obtain physical
damage insurance coverage for the vehicle, it may be necessary to attempt to secure this coverage from either the lienholder or the secondary market.

Security

MAIP Web Access – Compliance Requirements

For gaining and maintaining access to the MAIP portion of CAR's website, including access to the MAIP Policy Application, CAR assigns a User ID to each individual designated by your agency's Security Administrator.

* * IMPORTANT * *

The assigned User ID is specific to a designated individual and MAY NOT be shared.

Also note that:

Any change in that individual’s status with the agency must be reported to CAR within 5 business days.

CAR will disable any User ID that has been inactive for more than 60 consecutive days.

User IDs must not be disclosed to any party other than the agency's Security Administrator, the individual user and CAR, unless specifically required by law.

CAR has the right to cancel the agency’s User ID(s) for failure to comply with any of these provisions.

Reminders

User ID Clean-Up

Agency Security Administrators are once again reminded to delete user IDs for personnel who are either no longer employed by the agency or no longer require MAIP access. To
perform a review of user IDs, Security Administrators should sign into the MAIP section of CAR's website and select Security Administration. The Inactive Users listing will display
user IDs that have not been active in the last 60 days. CAR recommends that user IDs for which there has been no activity in the last year be deleted from the system.